What's it take to open a brick and mortar shop?

opportunity · July 16, 2014 11:16AM

I was just sitting around thinking...the coin shop situation is absolutely abysmal in my area. I live in a city of over 1 million in the metro area, yet the only shops around are your typical 20 cents on the dollar swindlers with cases full of ordinary junk. It seems like I could just clean house by doing it right. But the thing is, I'm fairly young, and don't have a ton of capital. First of all, what does it take to actually open? Doesn't seem like much, considering I could just round up some basic inventory, and most of my bread and butter coming from the buying side. Really though, is placing a lot of faith in the buy side a good idea? How often do people roll into a shop and sell stuff that is actually worthwhile?

Unknown · July 16, 2014 11:18AM

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AMRC · July 16, 2014 11:20AM

First and last month rent, some display cases, a small promotional budget, some insurance premiums and lot's of tolerance.

savoyspecial · July 16, 2014 11:21AM

>> But the thing is, I'm fairly young, and don't have a ton of capital>>

then you cant do it.....I'm sorry

opportunity · July 16, 2014 11:24AM

<< >> But the thing is, I'm fairly young, and don't have a ton of capital>>

then you cant do it.....I'm sorry >>

I didn't say I have no capital, just not a ton. What about a mostly consignment based shop, except for small stuff? Has that been tried?

It seems like a few random shops popped up around town in the last few years, get their name out there, and then just keep their cell # listed and a small discreet office space for appraisals and buys. I thought that was slick.

ianrussell · July 16, 2014 11:27AM

Capital is one of the most important parts. You can never miss out on a deal due to not having enough capital. And most coin dealers underestimate what they will need.

- Ian

Tookybandit · July 16, 2014 11:28AM

Save up 5 years of both living expenses and business over head expenses. Make sure you factor in a solid advertising budget. Find somewhere you can negotiate a 1 year lease (Don't get stuck in a 5yr). If you are making money consistently after 3 years keep it going, if not GET OUT.

TwoSides2aCoin · July 16, 2014 11:35AM

This is America. It takes gumption, one. My mom taught me I could do anything I want so long as I put my mind to it. Look yourself in the mirror and say : "I can, and I will". Then remember what a _ _ _ _ sandwich tastes like because we have to eat a lot of them.

Barndog · July 16, 2014 11:39AM

if you are willing to try and don't mind failing, it takes only effort. Go for it.

jdimmick · July 16, 2014 11:42AM

Ian nailed it,

Capital Numero Uno.

Then knowing where to sell the stuff that comes in, not everything can be sold otc, it has to go to different selling sources. Knowing where to go with what is key!

Safety a big concern as well.

advertising, letting people know you are there.

I got out of the store front biz mainly due to safety reasons, but did well while I was there due to the gold market. However, several of the other dealers around here have so little capitol, I get calls all the time to come and look and make offers. They can usually make good $ because they buy so low, but sometimes I can do just as well, by slow rolling and placing it to optimal sources.

ms70 · July 16, 2014 11:43AM

This is an interesting topic since I stopped at my local coin shop for the first time last Thursday. It had a sign that said "open" but it was
closed. I called the number on the window and the guy said he'd be in Friday for about an hour at noon, then Monday from 2 to 4. I was
like, "Ok...." I didn't quite know what to say. I peered in through the tinted window and could see what appeared to be a total crap store
with empty display trays, garbage all over, some coin & currency supplies scattered about. The only "items" I could see appeared to be medals
of some sort.

I don't know what to make of it because he's been there for at least 6 or 7 years, during the time I was out of the hobby. I certainly can't see him surviving
from that business alone.

Bochiman · July 16, 2014 11:53AM

Some dealers are doing it as a post-retirement type of thing to keep themselves busy. As such, they make their own rules.

For those that do it as a full time (primary) job, there are key things to think about:

Location - super important. You want to be safe. You want to be easy to get to. Would be nice to be next to/near a banking facility for cash reasons (you and your potential customers).
Safety - more than just location. How is the design? If you were a crook, could you break in easily? Are you/your customers at risk entering/leaving the shop?
Capital - you need to have a super secure safe, and security system, and have adequate capital on hand. How much is adequate? Good question....could be $10,000 some days, could be $75,000+ other days. Being next to a bank where you have funds/line of credit may help out....but only during banking hours.
Trusted staff - very difficult to do it completely alone. Bathroom breaks. Meals. Emergencies. Running to the bank. Security issues from being alone.
Inventory - think about yourself and complaints you hear on the boards. Many see crap material or just modern stuff and never go back. Dealer may not have everything all the time, but you want people to understand that you have a good variety and good material (some people want the modern/low end stuff, and that's fine, just don't be all about that and not have classics and high end material)
Sources - both buying from and selling to sources are needed. How do you get stuff you can profit from and where do you sell stuff to get back your capital in a timely manner.

If you think it is easy, I suggest trying as a vest pocket dealer first. See if you can build up the sources. Talk to guys who run brick and mortars. Maybe someone is retiring soon and they have a good location, good security, and maybe even inventory to go with...maybe they can be a silent, minority, partner for awhile....

opportunity · July 16, 2014 11:55AM

Oh, that reminds me. I have seen a setup before where a guy just rented a small discreet office space instead of a typical retail store front, and operated almost exclusively as a buyer. What about a consignments only shop for anything over a few hundred bucks? You'll get your money in a few months, but nowhere else will you get more. Basically 80% of retail after overhead and 10% for me.

DaveG · July 16, 2014 11:57AM

It has been estimated that over half of all new small businesses go out of business within the first five years due to lack of capital.

If you know something about running your own business, then make a list of all your monthly costs and figure out how you'll pay 12 months of those costs (plus enough for you to live on) without having anyone walk into your shop to buy or sell - that'll give you an idea if you have anywhere near enough capital.

If you really want to give being a coin dealer a try, then I'd work some shows first.

You could start off by getting some inventory and going table to table, offering it to dealers. That will give you a good idea whether you know enough about grading and buying and selling.

After a few months, you could take a table to see if you like selling to collectors.

You could also try selling on eBay. One of my regular dealers at our local monthly show has (or had) a good customer who bought a lot of coins from him each month and then sold them on eBay.

Weiss · July 16, 2014 12:01PM

<< if you are willing to try and don't mind failing, it takes only effort. Go for it. >>

I agree. What success I've had in life I have mostly because I started working for myself when I was young.

Here's a small slice of being a dealer:

I was at my B&M's today when a person walked in with three items. A large size note (1917 red seal, I think), an average circ morgan, and shield nickel with scratches.

He offered $35 for the bill, $15 for the Morgan, and $1 for the nickel.

The seller accepted.

When he left, I asked what he was going to retail the bill for. He said he'd ask $75 or $80 but take a little less. The morgan I knew he could sell for $20. The nickel he overpaid for.

Why? He knew declining it would likely nix the deal, and offering what it was actually worth would insult the seller and likewise nix the deal.

If you can think a few transactions ahead like my B&M, if you're confident in your ability to sell what you buy, and you can put up with copper plated '43 steel cents, rare TRVST peace dollars, and home shopping network trinkets that miraculously came over from the old country, several times a day every day, go for it.

DollarAfterDollar · July 16, 2014 12:03PM

Monthly lease, Insurance, Gas, Electric, Phone, Water, License fees (if you buy bullion some towns want thousands), and incidental expenses like advertising (I like Facebook) and a security system. You'll need capital to buy everything you can that comes through the door. Even if you make just a few bucks on a deal it's something. You'll need some inventory for show (so that the cases aren't empty).

Your money is made buying things that come through the door. Often those things are not numismatic in nature. Sometimes they are worthless foreign coins. In EVERY CASE, you gotta know your stuff.

Then there's the whole give them a quote and watch them go somewhere else for a few dollars more routine.

Having a bid board is a huge asset if you get the buyers and sellers.

Good luck.

Elcontador · July 16, 2014 12:08PM

80% of the profits or more of the typical B & M come from the spread they make on bullion sales, which have absolutely nothing to do with rare coins. If there aren't many entities which buy and sell bullion coins in your area and you can market yourself, you might make it. But don't expect to pay the bills selling numismatic coins.

coin4sale · July 16, 2014 12:14PM

buy an existing coin shop and slowly change it to the way you envision.

you get a built in clientele as well as new blood

blu62vette · July 16, 2014 12:21PM

How good are you at buying scrap? Because that is what pays the bills at a B&M.

ianrussell · July 16, 2014 1:21PM

<< Save up 5 years of both living expenses and business over head expenses. Make sure you factor in a solid advertising budget. Find somewhere you can negotiate a 1 year lease (Don't get stuck in a 5yr). If you are making money consistently after 3 years keep it going, if not GET OUT. >>

Great advice. We did something similar when we started GC. We had low living expenses regardless, but we wanted x years of being covered so we didn't have to worry about anything.

Also - anyone starting a coin business (or any business for that matter) should put together a budget. Plan out five (or more) different scenarios. For GC, I had five or six, with different sales numbers, different # of employees, ad spend etc. It's very important to see and know what it takes to make money or lose money. Some people have no idea what their monthly overhead is. You have to know these numbers.

- Ian

Barndog · July 16, 2014 1:23PM

<< 

<< if you are willing to try and don't mind failing, it takes only effort. Go for it. >>

I agree. What success I've had in life I have mostly because I started working for myself when I was young.

Here's a small slice of being a dealer:

I was at my B&M's today when a person walked in with three items. A large size note (1917 red seal, I think), an average circ morgan, and shield nickel with scratches.

He offered $35 for the bill, $15 for the Morgan, and $1 for the nickel.

The seller accepted.

When he left, I asked what he was going to retail the bill for. He said he'd ask $75 or $80 but take a little less. The morgan I knew he could sell for $20. The nickel he overpaid for.

Why? He knew declining it would likely nix the deal, and offering what it was actually worth would insult the seller and likewise nix the deal.

If you can think a few transactions ahead like my B&M, if you're confident in your ability to sell what you buy, and you can put up with copper plated '43 steel cents, rare TRVST peace dollars, and home shopping network trinkets that miraculously came over from the old country, several times a day every day, go for it. >>

when will you be posting pics of the Morgan you purchased?

Dave99B · July 16, 2014 2:31PM

Hard to say, but I guess it would depend on the class of the store. I expect it would be a lot more than you might think.

If I were you, I'd work at an existing store to learn the biz from the inside out. Get paid while you are being educated.

Also, as others have mentioned, consider security very, VERY, carefully. It's sad, but it's reality in today's world. I've known two dealers who were involved in horrific incidents. One was killed in a robbery, the other exchanged gunfire with two thugs after being forced to open his safe. While he was unhurt, he retired shortly thereafter. Whatever you do, never work alone. You'll be a sitting duck. So sad, but true.

Good luck,
Dave

pennyannie · July 16, 2014 2:33PM

I have been self employeed for over 30 years now. You can never have enough cash on hand. I struggled all thru my 20's and 30's, the business comes first. Bought my business twice cause my first wife got tired of living on beanie weenies. Long past that now and I am glad.

LochNESS · July 16, 2014 6:23PM

The consignment scenario you described has been done to death - at antique malls. And the coins there rarely sell well.

If all you want is an office space for buying, get a PO Box. It's cheaper and safer.

morgansforever · July 16, 2014 7:47PM

I've considered it, would be great to be in n around what I love, coins. The reality is probably customers bringing in golden dollars and cheap jewelry, asking what's it worth. Then there's the risk factor, being held up or worse shot n killed. The part that's tough to overcome is the separation of collecting and selling/dealing. Can one collect and buy n sell to pay the bills and make a decent living? How much cash do u need to start up, 250k? More?

EDIT: What do you dealers try to make when you purchase coinage/bullion 50%? 100%?

LanceNewmanOCC · July 16, 2014 8:42PM

.
if you want to make it in any business establishment as the owner/operator, you best watch/listen to a LOT of people talking that have been there and done that. it sounds simple but youtube and forums are splattered with tons of great info, just gotta know where to dig. i'm great at figuring things out but sometimes having someone show you the way is kinda nice.

i've enjoyed listening/reading to gates, buffet, jobs, kiyosaki, orman, edelman and many others talk about what it takes to succeed as an entrepreneur.

leave your pride behind; learn what sacrifice means and be happy with what success(es) you get. learn whom is within traveling distance that you can do positive business with.

one of the biggest adjustments for me was getting over the paycheck mentality. took years. once you learn to get away from week to week, there is major freedom, mostly emotional but it feels great.

make no mistake about it, the costs are great and far above financial. don't do it half-azzed. learn where to put your effort and time and learn to make what you put your time and effort into benefit you and those around you.

don't do it to survive; do it to be great. (another fantastic subject to listen to from those that have accomplished it, greatness and its myriad of meanings)

learn your weaknesses and strengths. your weaknesses will make you fail far quicker than your strengths will let you succeed. i've often talked with other business owners about why certain businesses are no longer and the pattern that presented itself to me was, "their personal life", not their business. personal lives are often what drag the business down. it can happen the other way but from my studies, i think it is the 90-10% rule.

it is frustrating not being able to capitalize on big and medium sized opportunities when they come along but learning to move past things is a trait that is one that is valuable to cultivate. can't get all that you what so make what you get count.

nothing tops experience. once you do it for a while and process it, you will be amazed at what you will see. still amazes me to-date and i don't expect it will stop doing so any time soon.

i'll leave you with this video
.

g048406 · July 16, 2014 8:43PM

A few years ago, I met a husband/wife that owned a jewelry store in Casa Grande, AZ. They told me they often got in people bringing in coins. I rented a small spot, in their store, at the end of their display cases. They only charged me a small amount to use that space. I later found I only need show at the store a couple of days a week for a couple of hours. They also called me when coins came in and I could just drive over. Casa Grande is not a big town and traffic, especially in the summer(hot as heck), is slow. In fact, I now spend half the year in California. If I had opened my own separate store, I would have gone out of business fast. If business would have been heavier, I would have opened my own store. Maybe this sounds like an idea you might want to consider before going all-out on opening your own store. Overhead can be very expensive on your own store. Good Luck

LanceNewmanOCC · July 16, 2014 9:05PM

.
gosh there is so much to say.

keep an eye on your expenses. (2 ways of making money are; increase profit and/or decrease expenses) just make sure if you cut someone/something, it is worth doing so.

shop around try to understand how certain purchases will fit into your taxes and if you should spend or hold for a while. just tons of things where strategy and timing come into play.

also keep an eye on your credit score. it is a fantastic tool that if you don't have at your disposal, will cost you dearly in many ways.
.

bsshog40 · July 16, 2014 9:45PM

There is a little b&m that opened a few months ago in an adjacent town that I go to. He is only open for certain days right now and he also deals with some jewelry. I've been there twice. His coin stock has gone up since the first time. I asked him how things were going and he stated that he buys more than he sells right now. I like going in there as he is reasonable but I do believe that plenty of stuff to choose from is a key essential to a shop being popular/profitable. It's like a local flea market we have also, same guys, same coins, same high prices. I don't even mess with them. I like going in to a shop and seeing different things.

ambro51 · July 16, 2014 9:45PM

I think it would be sheer folly.

TwoSides2aCoin · July 16, 2014 10:11PM

<< I think it would be sheer folly. >>

In fact, I started in 2009 with practically nothing and still have most of that left.

Smittys · July 16, 2014 10:33PM

I just relocated my Coin business 2500 miles and started up in a new small town, and in less than three months I'm past where I
thought I'd be in a year.
Number one and two rules
ADVERTISE !!!!!!
Treat people FAIR !!!!!!!!!

TwoSides2aCoin · July 16, 2014 10:47PM

Keys. Ya gotta have the keys.

Catbert · July 16, 2014 11:18PM

From my good sized city, I observe that businesses make their money on scrap/bullion, not coins. I just can't see anyone with a store front surviving on any other basis here.

TPRC · July 17, 2014 12:20AM

I'm thinking of the advise which was given to me when I opened my own (non-coin) related business, which turned out to be true. I was advised to sit down and accurately estimate every cost that you believe you will encounter in order to accurately budget your expenses for the next year in your new business. When you have figured that out accurately, and you are sure you have carefully and accurately planned your expenses, multiple by a factor of 2-3! Truer words were never spoken.

pjcoins · July 17, 2014 12:25AM

Takes three things. Money, money and more money. I own my own shop and you can never have enough.

Sonorandesertrat · July 17, 2014 1:13AM

<< From my good sized city, I observe that businesses make their money on scrap/bullion, not coins. I just can't see anyone with a store front surviving on any other basis here. >>

This is mostly true where I live too, at least that has been the case since the recession started.

TwoSides2aCoin · July 17, 2014 1:21AM

Remember that commercial " Got Milk ? " A numismatist asks: "Got milk spots ? "
In this business the question is : "Got Orbs ? " A dealer asks : " Pardon me sir, have you any Grey Poupon ? "

CoinZip · July 17, 2014 3:11AM

What's it take to open a brick and mortar shop?

It takes a person that is not afraid to stand out in a crowd !!!

What's it take to open a brick and mortar shop?

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